Informa focuses on events and high-margin publishing

Informa (INF) is slimming down and tightening its focus on the academic publishing space and business events. The latter was clearly roughed up by the pandemic but events are now back on the agenda, although rising Covid-19 cases in key market China pose plenty of risks in the coming months. 

Informa said its first-quarter bookings for trade shows had more than doubled compared with last year, although this was deep in lockdown territory still for many countries. More promising is the number of bookings for the first half, which is already 76 per cent of 2019 revenue for the same period. On top of the higher cases in China, the company said Hong Kong would be unlikely to welcome event visitors until next year. 

Chief executive Stephen Carter said there would be “further growth and acceleration” this year through the return of events and the performance of the academic publishing arm, Taylor & Francis. 

Investors will get an early taste of this before dividends return after the interim 2022 results: Informa announced a further £200mn in buybacks, beginning this week, on top of £100mn in buybacks already completed this year. The buybacks are part of a £1bn cash return plan that could also include a special dividend later in the year. 

This is linked to the sale of the Pharma Intelligence division, which provides data for clinical trials and drug development. Private equity firm Warburg Pincus will pay £1.7bn for 85 per cent of the unit, with Informa holding on to the rest. 

There was clearly some recovering still to do in 2021 in most areas of Infoma, except for Taylor & Francis, as academic publishing did not see a major slowdown through the pandemic. Informa has also brought in a growth strategy, focusing on the much-smaller ‘pay-to-publish’ side of the market: “This strategy has expanded our addressable market from a historical focus on university library budgets to global research and development funding.” This part of the business has maintained its adjusted operating profit margin, at 37 per cent, and was also ahead of the other divisions in terms of pre-pandemic profitability. Many companies would be jealous of the academic publishing business model. 

The company has forecast an adjusted operating profit this year of £470mn-£490mn, up from £388mn in 2021, based on a completion of the Pharma Intelligence sale by the end of the first half. The risk to the Chinese events business is enough for us to keep Informa on a neutral rating despite the upcoming return of dividends at the next interims. Hold. 

Last IC View: Hold, 562p, 22 Apr 2021